I.3 Dissolution of the Foundation on 14th October
l950

The plaintiffs now contend, by an amendment during the course of the
trial, that when the Minister of Justice of the Land Thüringia
purported to dissolve the Art Foundation on 14th October 1950 the painting
passed to the Land Thüringia by universal succession. When the Länder
were dissolved in 1952, the property of the Länder devolved to the
German Democratic Republic [East Germany] and on unification to the
Federal Republic of Germany. Cobert accepts that if dissolution had the
effect for which the plaintiffs contend then, on unification, title
devolved either to the Federal Republic of Germany or to the City of
Gotha.

The importance of this contention is that, if it is right, the
whereabouts of the painting in 1950 is irrelevant. The Land Thüringia
became owner even though the painting was not in its possession but was in
the Soviet Union.

The contention raises two fundamental issues.

(1) Did the dissolution pronounced by the Minister of Justice of the
Land Thüringia have extra-territorial effect as a matter of German
law?

(2) Will an English Court recognise or enforce a claim to title based
upon the purported dissolution?

Was the Dissolution Effective to
Transfer Title to the Painting to the Land?

I should record, at the outset, that the Federal Republic of Germanys
reliance upon the dissolution of the Art Foundation to trace their title
came very late in the day. There was no reference to it in the original
pleadings or in the evidence of Professor Werner exchanged before trial.
My comments are not meant as a criticism; inevitably during the course of
this case the focus on particular issues changed and new material arrived
throughout the trial. Nevertheless the lateness of the submission meant
that it was difficult for Cobert fully to deal with it. In particular,
criticisms of Professor Brunners evidence on this point, which I
shall detail later, were not warranted; Professor Brunners evidence
did not deal with this point in full at the outset because the point had
not been made. He was compelled, through no fault of his own or that of
Cobert, to deal with the point at the last minute. It would, therefore, be
unfair to criticise any omissions in his evidence. Rather, the lateness of
the submission requires the evidence on behalf of the Federal Republic of
Germany on this point to be scrutinised with particular rigour.

By Article 87 (1) of the BGB:-

"If the fulfilment of the object of the foundation has become
impossible, or if it endangers the public interest, the competent
authority may give the foundation another stated object or may dissolve
it." By Article 88 of the BGB, on the dissolution of a foundation the
assets pass to the person specified in the constitution.

This Article was implemented in Thüringia by Article 14 of the Thüringian
Implementation Regulation 16 May l923.

According to Professor Brunner, in his original report (paragraph 149):-

"According to Article 14 of the then applicable Thüringian
Implementation Regulation to the German Civil Code dated 16 May 1923 upon
its abolition, a foundations property passed to the state of Thüringia."
There was no translation of Article 14 in evidence before me although the
plaintiffs asserted that it provides:-

"The property of the foundation falls upon its dissolution to the
state, if its constitution does not otherwise provide". Since
Professor Brunner agrees that that is the effect of Article 14, I do not
think that the absence of a translation matters.

By a decision of 26 June 1941 of the Oberlandesgericht in Jena,
Paragraph 10 of the Art Foundation Statutes was altered so as to provide
that:-

"Changes in statutes affecting the purposes of the Foundation and
its assets, as well as decisions about the application of assets in the
case of dissolution of the Foundation requires the unanimous consent of
the Board of Directors. The latter is also required for the dissolution of
the Foundation." (The previous Statute made no specific reference to
dissolution and referred to a majority of at least two thirds).

Paragraph 11 was altered so as to provide:-

"Should the Foundation be dissolved or its former purposes no
longer be applicable, its assets, as far as taxation laws do not provide
any restrictions, are to be used for public and charitable benefits ..."
On 17th July l998, before I had given judgment, I received further written
evidence from Professor Brunner as to the effect of the amendment of 26th
June l941 and written evidence from Professor Werner in response.

Professor Brunner takes the view that this provision in the Foundations
Statutes was disregarded when the Foundation was dissolved; there was no
resolution of the Board of the Art Foundation, nor was approval of the
Family Foundation obtained. The founders wishes were to take
priority over the provisions of Article 88 of the BGB and Article 14 of
the Thüringian Implementation Regulation.

By the time of the dissolution there was no Board of Directors in Thüringia.
They had, so far as I am aware, moved to Coburg in West Germany. They made
no resolution to specify a beneficiary. In those circumstances, the assets
passed to the Land of Thüringia pursuant to Article 14 (Professor
Werner relied upon the commentator Seifart in support of that
proposition).

Professor Brunner did not dissent from the proposition that if the
dissolution was valid and no beneficiary was specified, then Article 14 of
the Thüringian Implementation Regulation of 16 May l923 would have
the effect that property passed to the Land. However, of more significance
was his view that the failure of the Directors to specify the beneficiary
confirmed that the dissolution pronounced by the Minister of Justice was
in substance an act of expropriation. The absence of any reference to the
Board of Directors, either in relation to dissolution or in relation to
the specification of the beneficiary on dissolution, merely confirms that
the dissolution was a unilateral sovereign act of expropriation. It is to
that contention I now turn.

Expropriatory Intention lying
behind the Dissolution

Cobert contend that, although in form the Ministry of Justice purported
to dissolve the Art Foundation, in substance this was an expropriation
because the Foundation was dissolved for the purpose of expropriating its
assets and with the intention that those assets should pass to the Land.
This submission is of importance in relation to both the first and second
issues (identified at the beginning of this Section). Under German law it
is accepted that an act of expropriation will not have extra-territorial
effect. Moreover, if, in substance, the dissolution amounted to
expropriation, it would not be recognised by the English courts, because,
at the time of dissolution, the painting was not in the possession of the
Land Thüringia.

Cobert rely on documents leading up to the dissolution in support of the
contention that the act of dissolution was in substance an act of
expropriation. On 28th July l948, the Ministry of Finance in Weimar
requested an examination whether:-

"1. The Foundation of the Duke of Saxe-Coburg-Gothas family;

2. The Duke of Saxe-Coburg-Gothas Foundation for Art and Science
are still existent and to be considered valid entities" A file
memorandum from the Ministry for Public Education dated 21 March l949
said:-

"Nothing has come to the attention of the Ministry of Public
Education concerning a dissolution of the two Foundations as legal persons
under private law by the Ministry of Justice under paragraph 87
(mistranscription in translation) of the Civil Code, due to their
inability to fulfil the Foundation purpose. As a matter of fact, the
Foundations purpose can still be carried out in relation to both
foundations. ...(the memorandum then refers to expropriation of private
assets in December l948).

The memorandum concludes in a handwritten note:-

"Also to the Arts Department with a request for information whether
these two Foundations are to become state property". On 19 August
l949, Dr Thiemann from the Ministry of Education wrote to the Ministry of
Finance:-

"As there are no moneys available, and without touching on the
valuable items in the Collection, not even the salaries of the Foundation
employees can be paid, it will be correct to also dissolve this Foundation
as per paragraph 87 of Civil Code. As the Foundation Statutes do not
contain guidelines as to what is to be done with the assets in such a
case, the Land of Thüringia will become the owner as per paragraph 14
of the ... (Regulation 16.5.1923)" The letter continues:-

"The Land of Thüringia would also need to examine the question
which of the former Foundation employees could be re-deployed in the State
Museum and the State Library." By letter dated 9 December l949 from
the Ministry of Public Education to the Ministry of the Interior, Dr
Thiemann wrote:-

"In case of dissolution of the Art Foundation under paragraph 87 of
the Civil Code, the Foundation assets would - as per paragraph 14 of the
Thüringian Order of Execution of Civil Code of 16 May l923 - transfer
to the Land of Thüringia, because the Foundation Statutes do not
nominate who should receive the assets upon dissolution.

In addition, we refer to our letter of 19.8.l949 whereby the legal
situation of the Art Foundation is made perfectly clear." Whilst I do
not accept Dr Thiemanns claim to clarity, in my judgment this
correspondence does not establish that the act of dissolution was an act
merely concerned to ensure the transfer of the assets of the Art
Foundation to the Land. In my judgment, they support the conclusion that
the Land was of the opinion that the Foundation was no longer able to
fulfil its purposes and, accordingly, should be dissolved under Article 87
of the BGB. This had the effect of passing the assets of the Art
Foundation to the Land, but in my judgment that effect was not the
intention lying behind the act of dissolution. Dr Thiemanns
statement that the Foundation Statutes did not nominate the beneficiary
(letter 9 December l949) was correct. It is apparent that he was unaware
of the amendment of l941. This was not surprising but, in my judgment, it
does not reveal an intention to disregard the wishes of the Board. It
merely reflects the reality that there was no Board of Directors in Gotha.
The fact that the Board of Directors had moved from Gotha to Coburg in
West Germany leads to Coberts next submission relating to the seat
of the Foundation.

The Foundation Seat

Professor Brunner was also of the opinion that the purported dissolution
of the Foundation by the Minister of Justice of the Land Thürigia was
ineffective, because the Land had no jurisdiction to do so. He said that
its jurisdiction depended upon the location of the seat of the Foundation.
By 1950 he says that the actual management and seat could only have been
in Coburg. His reasoning depends upon the facts relating to management of
the Art Foundation in the late 1940s and upon his interpretation of
Article 80 of the BGB.

The facts
relating to the Art Foundations Seat

A report from the Ministry of Finance of the Land Thüringia
complained that records of the Art Foundations assets were held in
Coburg and that both the Family and Art Foundations were managed in Coburg
and refused to hand over documents. (This document was not translated). It
is apparent from a letter from Oberlandesgericht Bamberg (in West Germany)
to the Oberlandesgericht Erfurt in Thüringia dated 16 March 1950 that
the Oberlandesgericht Bamberg was prepared to take over supervision of the
Foundation. By a decision of the Oberlandesgericht Bamberg dated 30 June
1951 it was recorded that, in relation to the Family Foundation the
supervisory authority formerly exercised by the Oberlandesgericht Gera (in
Thüringia) had been moved by the Board of Directors from Gotha to
Coburg in accordance with the Foundation Statutes. By a decree of 7
December 1960 the court in Bamberg stated that the Art Foundation should
not be left without supervisory authority and recorded that:-

"As the Family Foundation as well as the Art Foundation must not be
left without a supervisory authority, and the Administrative Seat for both
Foundations is at Coburg, the Bamberg Court of Appeals entailed estate
senate will, effective from 1.1.1961, assume supervisory authority also of
the Art Foundation". This was recalled in a letter dated 5 February
1968.

The formal decision of the Oberlandesgericht Bamberg recording
relocation of the Art Foundations seat was recorded by a decision of
the Oberlandesgericht Bamberg on 30 March 1976.

In the light of the evidence that the management of both Foundations was
being carried out in Coburg from the 1940s onwards Professor Brunners
view was that the seat of the Foundation was in Coburg at the time of the
purported dissolution and accordingly the Land Thüringia had no
authority to dissolve the Art Foundation.

I do not agree that the Land Thüringia had no authority to dissolve
the Art Foundation. It is true that it would only have authority while the
seat of the Art Foundation remained within Thüringia. But in my
judgment, whatever the reality as to the actual management of the
Foundation, its seat, under German law, by virtue of Article 80 of BGB
remained in Thüringia. By Article 80:-

"The seat of the Foundation is deemed, unless otherwise provided,
to be the place where its management is carried on." I accept
Professor Brunners evidence that, in reality, management of the Art
Foundation was carried out in Coburg. It could hardly be otherwise since
the Art Foundation itself had no control over its property insofar as that
property was situated in Thüringia. But I accept Professor Werners
evidence that the seat of the Foundation remained, as a matter of German
law, in Thüringia and that that seat was not changed until 30 March
1976. Pursuant to Article 80 of the BGB the place of the Foundations
management was not its seat because the Statutes otherwise provided. In
those circumstances the competent authority, namely the Land Thüringia,
did have power to dissolve the Art Foundation.

Did the Property of the Art
Foundation including the Painting situated then in the Soviet Union Pass to
the Land Thüringia?

The Federal Republic of Germany contend that once it is established that
the seat of the Foundation was in Gotha and the competent authority was
the Ministry of Justice of Thüringia, then property passed to the
Land Thüringia by universal succession. The meaning of universal
succession, foreign to English law, was explained by Lord Keith of
Avonholm in National Bank of Greece and Athens S.A v. Metliss
[1958] A.C. 509. He cites one passage from Stair:-

"Heirs in law are called universal successors quia succedunt in
universum jus quod defunctus habuit, they do wholly represent the
defunct, and are as one person with him, and so they do both succeed to
him active, in all the rights belonging to him, and passive in all the
obligations and debts due by him. .... the extinction of a corporation
under statute or decree and the passing of all its rights and liabilities
to a successor exhibits, in my view, all the features of a universal
succession." (530-531) The importance of this contention is that, if
there was universal succession, the property of the Art Foundation passed
to the Land even if that property, including the painting was situated
within the Soviet Union.

Cobert contend, on the basis of Professor Brunners evidence, that
the doctrine of universal succession cannot apply because at the time the
Art Foundation was in fact being managed in West Germany in Coburg. It
cannot be said that the act of dissolution had any effect on the Art
Foundation in Coburg or works of art under its effective control in West
Germany at that time. Mr Brindle QC says that there is no room for the
application of universal succession in relation to the Art Foundation once
it is accepted that the dissolution did not have the effect of
transferring title to works of art in West Germany to the Land Thüringia
in East Germany. He submits that either there is universal succession in
which event title to all the property passes to the successor wherever it
is situated or there is expropriation which will only have effect in
relation to assets within the territorial jurisdiction of the
expropriating authority.

I do not accept the evidence of Professor Brunner on this point. His
proposition that the dissolution did not have extra-territorial effect
depended firstly on his view that because the dissolution was an act, in
substance, of expropriation it had, like expropriation, no
extra-territorial effect. Secondly his views were based on what he
described as "German practice concerning the property in Bavaria".
The dissolution had no effect on property in Bavaria, and because there
was no reason to distinguish between assets in Bavaria and assets in the
Soviet Union, it had no effect upon assets within the Soviet Union.

I have already considered whether the dissolution amounted to an act of
expropriation. In my judgment it did not and its effect is not therefore
to be limited to the territorial jurisdiction of the dissolving authority
as it would have to be if that dissolving authority must be regarded as an
expropriating authority. As to his second ground, it seems to me that the
reason why the dissolution had no effect upon title to the assets in West
Germany is not because the doctrine of universal succession did not apply
but because West Germany did not recognise the extra-territorial effect of
dissolution within East Germany in relation to assets in West Germany. It
was the very problem of the effect of dissolution on assets in both parts
of a divided Germany which led to the passing in West Germany of the Law
for the Supplementation of the Law for the Amendment of Provisions
concerning Entailed Estates and Foundations dated 3 August 1967. The
problem is familiar to the courts of this country because of the Carl
Zeiss Stiftung litigation. (None of the authorities in relation to that
litigation were cited to me, but Buckley J.s review of the history
of that action in Carl Zeiss Stiftung v. Rayner & Keeler (No.3)
[l979] Ch.506 at 528 to 536 has a certain resonance in this action).

Article 1 of the Act of 3 August l967 amends paragraph 2a of the
previous Act dated 28 December 1950 as follows:-

"If the Civil Law Foundation formed on the basis of German legal
provisions had its seat on 8 May 1945 outside the territory over which
this law has validity (in other words outside West Germany) and if it had
assets within the territory of validity of this Act (West Germany) a duly
competent superior state authority of the land in which the assets are
located can exercise the supervisory function. It can hereby take all
decisions which it regards as necessary in order to keep the Foundation
alive or continue. In particular it may move the seat of the Foundation
without being bound by provisions of the Statutes. The superior state
authority may transfer the exercise of its competence to another
authority." The law of 1967 was necessary because West Germany did
not recognise acts relating to a Foundation in East Germany or that any of
those acts had any effect on assets of that Foundation in West Germany The
reason why the dissolution of the Art Foundation in East Germany had no
effect on the assets in West Germany is not because the doctrine of
universal succession did not apply but because West Germany did not
recognise the dissolution in East Germany and consequently did not
recognise its effect.

Conclusion as to Dissolution

For the reasons I have given I am satisfied:-

1. that the seat of the Art Foundation was in Gotha in 1950;

2. that the Ministry of Justice of Thüringia was the competent
authority with power to dissolve the Art Foundation pursuant to Article 87
of the BGB;

3. that the dissolution was not an act of expropriation;

4. that by universal succession, title to the property of the Art
Foundation, save insofar as that property was in West Germany, which did
not recognise the dissolution, passed to the Land Thüringia. In the
light of those conclusions I must now turn to the question as to whether
an English Court recognises the Plaintiffs title either in relation
to expropriation or in relation to dissolution of the Art Foundation.

I.4 Recognition or Enforcement in an English Court
of FRGs Title to the Painting Under German Law

If, under German law, title to the painting passed to the Federal
Republic of Germany, the question arises whether an English court should
recognise or enforce that title. Cobert, firstly, relies upon the
principle that English Courts will not recognise a governmental act
affecting private property rights when the property is situated outside
the territory of that government. (Rule 122 in Dicey & Morris,
q.v.supra). Secondly, Cobert invokes the principle that English courts
will not entertain an action to enforce the penal, revenue or other public
laws of a foreign state. (Rule 3 in Dicey & Morris).

These contentions have no bearing on my conclusion that title passed to
the Land Thüringia (and thence to the Federal Republic of Germany )
by the expropriatory Law of 9 October 1945 and that the expropriation of
the art collection was not repealed by the Law of 4 December 1945. That
expropriation was effective and will be recognised by our courts because,
at that time, on my findings of fact, the painting was within the
territory over which the Soviet Military Administration had jurisdiction
(see Princess Paley Olga v. Weisz [1929] 1 KB 718 at 725) and was
in the possession of the trustee. The Federal Government of Germany is
merely seeking to protect rights of property which had vested prior to
this action and to enforce those rights under the general law of property.
Professor Mann states in Further Studies in International Law
(1990):

"It should also be accepted that if a State confiscates a chattel
situated within its territories, but it does not obtain possession, it
cannot recover it by action in a foreign country to which its original
owner may have been able to take it." (356-7). These contentions are,
however, of particular importance in relation to my alternative conclusion
that on dissolution, in 1950, title to the painting passed to the German
Democratic Republic nothwithstanding that the painting was in the Soviet
Union.

Was the dissolution a governmental
act?

The principle, on which Cobert relies, is summarised as Rule 122 in
Dicey & Morris:-

"A governmental act affecting any private proprietary right in any
movable or immovable thing will be recognised as valid and effective in
England if the act was valid and effective by the law of the country where
the thing was situated (lex situs) at the moment when the act takes
effect, and not otherwise." It is important to emphasise that the
submission of Cobert is wider than its earlier submission, in relation to
German law, that the dissolution was in substance an expropriation. The
act of dissolution of the Art Foundation was, it is said, a governmental
act which affected private property rights. In those circumstances the
effect of the dissolution namely the transfer of the title to the
painting, from the Art Foundation to the German Democratic Republic will
not be recognised by the English Court.

The issue turns on the question whether the pronouncement of dissolution
by the Minister of Justice of the Land Thüringen was in substance a
pronouncement relating to the status of the Art Foundation or was in
substance a governmental act transferring property rights to the Land.

It is plain that, in order to make the distinction, I must consider the
substance of the action of the Minister of Justice and not merely have
regard to its form (see Diplock J in Adams v. National Bank of Greece
and Athens S.A. ([1958] 2 QB 59 at 75 and 77). In Studies in
International Law (Oxford 1973) Professor Mann writes:-

"It is equally certain that in these matters the court will not
allow itself to be misled by appearances: on the contrary, it will
investigate whether what the plaintiff asserts is in substance a
prerogative right the direct or indirect enforcement of which is being
sought. (page 502)" Governmental acts which transfer property rights,
fall within that class of case, which Nourse J, in Williams &
Humbert Ltd v. W & H Trade Marks(Jersey) Ltd [1986] AC 369 at
378-379, described as those which English courts will not enforce on
grounds of public policy ( Class II laws). They are those :-

"whose validity and effect within the territory of the foreign
state are recognised but which will not be directly or indirectly enforced
in England. This can now be seen to be an application of the wider rule
that English law will not enforce foreign laws which purport to have
extra-territorial effect :see

Bank Voor Handel En Scheepvaart N.V. v. Slatford [1953] 1 QB 248"
(379E). In that case, Devlin J. held that the decree of a foreign
government would not be effective to transfer property situated in this
country whether or not the law was confiscatory or penal (see page 263).
In the House of Lords in Williams & Humbert (q.v. supra) Lord
Templeman stated the principle as:-

"The public law of a sovereign state cannot change the title to
property which never comes within the jurisdiction of that state."
(431G) Such public laws are to be contrasted with those acts which, in
substance, are merely concerned with the status of a corporation or
foundation. Such acts fall within the principle described as Rule 155 :

"The existence or dissolution of a foreign corporation duly created
or dissolved under the law of a foreign country is recognised in England."
The contrast may be made between Adams (q.v.supra) and The
National Bank of Greece and Athens S.A v. Metliss[1958] AC
509. Metliss affords an example of the English court recognising
that a foreign decree was an act relating to the status of a corporation
and recognising, accordingly, the consequences of that status. It
concerned a decree of 1953 whereby two banks were amalgamated into a
third. The effect of the amalgamation was to put the new bank in exactly
the same position as the former bank before amalgamation. Since English
law recognised the status of the new bank so also it recognised the
consequences of its status, namely the assumption of the former banks
liabilities (see Viscount Simonds at 525 and Lord Tucker at 529).

In Adams (q.v.supra) the Greek Government, by legislative decree
of 1956, with retrospective effect, sought to absolve the defendant bank
from the obligations of the original guarantor bank in respect of bonds.
Diplock J held that the law of 1956 was not a law of succession or a law
relating to capacity or status but in substance discharged liabilities and
altered rights which had vested in English law. Under English rules of
private international law that decree was not effective to discharge the
liability of the bank as guarantors under the bonds.

In my judgment the Federal Republic of Germany is correct in its
contention that the pronouncement by the Ministry of Justice of the
dissolution of the Art Foundation was merely a pronouncement which
concerned the status of the Foundation. It was a decision made because:-

"The fulfilment of the object of the Foundation has become
impossible" (pursuant to Article 87 of the BGB.) In those
circumstances the dissolution should be recognised by this court pursuant
to Rule 155 and its consequences ought to be recognised. Those
consequences included the transfer of the property of the Art Foundation,
pursuant to paragraph 14 of the Land Thüringen Implementation
Regulation of 16 May 1923. In my judgment the act of dissolving the Art
Foundation was not an act done under that which Lord Templeman describes
as "the public law of a sovereign state" or that which is
described by Professor Mann as an exercise of a prerogative right or
analogous to a foreign decree transferring property. It was, in my
judgment, an act concerned solely with the status of the Art Foundation.
The Art Foundation was dissolved in accordance with the German Civil Code.
The Art Foundation was duly dissolved under the law of its place of
creation. English law should, therefore, recognise the effects, under that
law, of the dissolution.

Is This Action an
Action for the Enforcement directly or indirectly of a Penal Revenue or
other Public Law of a Foreign state?

Cobert contend that even if the act of dissolution fell outwith Rule 122
nevertheless the action in this case is the direct or indirect enforcement
of a public law of a foreign state. Rule 3 in Dicey & Morris (page 97)
provides:-

"English courts have no jurisdiction to entertain an action:

(1) for the enforcement, either directly or indirectly, of a penal
revenue or other public law of a foreign State; or

(2) founded upon an act of state." The rationale of the Rule is
that to enforce a claim based upon a penal, revenue or other public law of
a foreign state is to permit an assertion of sovereign authority by one
state within the territory of another.

Mr Brindle QC contends that the claim, insofar as it relies upon title
derived from the dissolution decree of 1950, falls foul of Rule 3. Even
though the law is not penal or a revenue law, it is a public law of a
foreign state. It will not be enforced in relation to property that was
not within the territory of the Land at the time of dissolution. In
support of the proposition that there is a third category of laws, other
than penal and revenue laws, which will not be enforced by an English
court. Mr Brindle QC relies upon the judgment of Lord Denning MR in AG
of New Zealand v. Ortiz [1984] 1AC 20 to 21, a reference to Rule 3 by
Lord Mackay in Williams & Humbert at 437C and in particular
the decision of the Court of Appeal in United States v. Inkley
[1989] QB 255 at 264 to 265. Whilst there remains some doubt as to whether
a residual category of public law exists (see Dicey & Morris page
105), in this case I do not think it matters. It is clear that the
touchstone of the third category is an act done by a state by virtue of
its sovereign authority. (see Lord Denning in AG of New Zealand v.
Ortiz at 21A). Acts which do not amount to an exercise of sovereign
authority outside that authoritys own territorial limits fall
outwith Rule 3. Even if one recognises a third catagory of public law, in
addition to penal and revenue laws, it must, at least be eiusdem generis
to those laws. It must be an act de jure imperii and not de
jure gestionis.

For the reasons I have already given, the act of dissolution by the
Ministry of Justice was an act concerned solely with the continuing
existence of the Foundation. The decision to dissolve was dictated solely
by the condition of the Foundation. It was not an exercise of sovereign
authority. Thus, to bring an action which seeks to protect rights which
trace their origin to the dissolution is not an attempt to exercise
sovereign authority in this country. In my judgment English courts can and
should recognise a title derived from the dissolution of 1950 and enforce
an action which seeks to protect those rights.

I.5 Return of the Painting to the German Democratic
Republic in 1987

The Federal German Republics contention that the painting must
have entered the German Democratic Republic in 1987, on its way to West
Berlin, led to a spirited argument as to whether that itself had in law
the effect of perfecting an inchoate expropriation. Sadly, it is
unnecessary to resolve the question whether the fact that the painting may
have passed over or through the territory of the German Democratic
Republic had that legal effect. No such fact has been established. There
is no evidence as to how the painting came into West Berlin. In those
circumstances there is no factual basis upon which to found a conclusion,
if such a conclusion could be reached, that as a matter of law title was
thereby perfected.